Chat Transcript: Like 20 Blog Posts in One

Austin, Tex.: Good morning, Ezra. Is there collusion going on between insurance companies and health-care providers (hospitals, doctors) to help generate profits for both? Is this something the FTC should look in to? Are lobbyists for the industry successful at preventing any investigation into this business?

Or, am I too wrapped up in conspiracy theories?

Ezra Klein: I wouldn't quite call it collusion. Everyone just follows their incentives. Insurers don't clamp down on doctors because when they tried that in the 90s, there was a huge public backlash. Doctors don't clamp down on themselves because it would make them any money. Employers don't clamp down on insurers because the money just comes out of worker wages. Workers don't clamp down on employers because they don't realize that the money comes out of wages.

It's the magical cost-shifting merry-go-round of health care, and it means no one is quite responsible for the systems costs: The people driving up prices are making money, and the people paying the bill don't know what it's costing them.

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Washington, D.C.: Hi Ezra, I've heard that once you're in the public option you won't be able to get out of it. Is that true?

Ezra Klein: No. Not in any way.

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Ashland, Mo.: Concern is expressed that health expenditures now take 16-17% of GDP. In the abstract, why does this matter if the public wants to spend that much? What part of GDP is shrinking to accommodate health expenditures?

Ezra Klein: There are three problems. It's not clear the public "wants" to spend this much. It's not clear that what we're getting is worth that much. And it is clear that we can't continue on the growth path that's led us to spend that much.

The first issue is simple enough: As noted in the first question, health care costs are largely hidden from the public. They show up in wages no one gets, or in the national debt, or in payroll taxes. If everyone had to cut a check for their full share of national health expenditures each year, the politics of this issue would be very different.

Second, estimates are that about 30 percent of the care we purchase is wasted. meanwhile, other countries spend half as much, don't have anyone uninsured, and have similar outcomes. In other words, we're getting a bad deal, and surely we don't want that.

Third, health spending is growing a lot faster than GDP. If it keeps going, it will pretty much bankrupt the government, and by 2080, take up 100 percent of GDP. Every dollar n this country. obviously, that can't happen, so some intervention will be needed. The question is what, and how.

Greenville SC: With Ted Kennedy completely out of the (physical) picture now and no obvious successor to this point, who do you see becoming the leading "champion" of health care reform come September? Someone needs to step up and become the knight in shining armor. Surely not Baucus.

Ezra Klein: I don't think there'll be a new standard-bearer before this policy process ends. It's too far along. But what about after?

The problem is you need two things: interest and jurisdictional power. Kennedy had both. Few others do. Sherrod Brown, for instance, knows a ton about the issue and is committed to it, but he doesn't chair a relevant committee. Same goes for Ron Wyden. Dodd has been subbing for Kennedy on HELP, but this issue has never been his evident passion. Hillary Clinton would have been the obvious choice, but she went to State.

The answer, unfortunately, is that there's no obvious candidate to fill Kennedy's shoes on this.

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Ashtabula, Ohio: I've heard that the health-care reform bill in the House would insure 97 percent of Americans. Who are the 3 percent who would remain uninsured?

Ezra Klein: people who don't comply with the mandate. People who fall into the cracks of affordability. People who are off the grid a bit. People who are transient.

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Hays, Kan.: If I understand correctly, expanding Medicaid eligibility to 150 percent of poverty would give access to health care to 20 million of the currently underinsured. Assuming I've got my facts straight, that's would be a huge and important accomplishment. Why aren't we hearing more about that? Is it because it's too popular or too unpopular?

Ezra Klein: Neither: it's because politics isn't very interested in poor people. The Medicaid expansion and the subsidies are the really significant, really expensive parts of the bill. They will help more people than any other piece. But there's almost no focus on them. I tried to get at some of these issues in my post on The Politics of the Poor.

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Durham, NC: So, my Fantasy Football League has its draft tonight, and it got me thinking: This hobby has swept the nation and is credited with adding interest to even the lackluster games on Sunday. I know CNN had a political market game back during the primaries where candidates and questions were treated like stocks that people could buy and sell. What do you say we create a Fantasy Congress League where people draft legislators and get points based on their performance? I think it could restore interest in democracy without all the town hall crazies.

Ezra Klein: I don't know about restoring interest in democracy, and I don't know exactly how you'd measure it, but I'm sure the Sunlight Foundation or Pew or someone would happily fund this experiment, and a lot of obsessives would happily play.

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Adam - Zurich, Switzerland: A bit off topic, but maybe you could throw this in at the end of your chat session. My wife and I are moving to the DC area, where would you recommend living for an urban 30-something couple? If you had to choose between Clarendon, Rosslyn or Ballston, which would it be?

Ezra Klein: None of them! I recommend living in DC if you can, particularly the Mt. Pleasant or Columbia Heights area. Petworth is getting better fast, and it's comparatively affordable, and some interesting stuff is happening down in the 5th and K area.

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Richmond, Va.: "The first issue is simple enough: As noted in the first question, health care costs are largely hidden from the public. They show up in wages no one gets, or in the national debt, or in payroll taxes. If everyone had to cut a check for their full share of national health expenditures each year, the politics of this issue would be very different."

Do you support eliminating the tax preferences for employer-provided health insurance to address this issue?

Ezra Klein: Yes, though it has to be paired with reforms to build an alternative to the employer-based system. But yes, definitely.

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Washington, DC: Do you think that the one of the major strategic mistakes in trying to pass the healthcare was the Congressional centered approach? Specifically, I am wondering if you think the trouble is that this approach has caused has to do with the inability of the mass media to effectively cover a long complex policy making process in Congress.

Ezra Klein: Not really. In 1994, everyone agrees that the major mistake was the executive-centered approach. This year it's the Congress-centered approach. But the problem isn't the approach. it's the legislative process itself. I'm like a broken record on this point, but comprehensive reform has scared off or defeated FDR, Truman, LBJ, Nixon, Carter, and Clinton. They weren't all dummies, or incompetent.

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other countries spend half as much, don't have anyone uninsured, and have similar outcomes: But all of these countries have some kind of national, universal, government controlled system. We have 30 years of evidence that a "free market" competitive system cannot match this. Is there a shred of evidence that this will change?

Ezra Klein: Nope.

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Washington, D.C.: About 30 cents out of every dollar spent on health insurance goes to administration, profits, etc--everything but medical care. In contrast, Medicare spends about 3 cents per dollar on administration. On the face of it, health care "competition" in the private sector doesn't seem to be holding down costs--not too hard to understand, given how little choice most consumers actually have. Why does the idea that the private sector is necessarily more efficient persist in the face of the evidence?

Ezra Klein: This isn't quite right. For a long explanation on admin costs, go here. The short version is that Medicare really spends about 5 to 7 percent, which is similar to large insurers with large employers. The 30 percent comes on the individual market, which is dystopic. So the real key is making sure your risk pool is big enough. Size, not public or private, is the determinant.

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Madison, Wis.: Do you fear we have gone past a point-of-no-return when it comes to the public option? As in, any bill without the public option will be seen as a defeat for liberal Democrats, and any bill with a public option will be considered completely unacceptable for the "moderate" senators (Collins, Snowe, Nelson, Landrieu).

Isn't the only option then for the Finance committee to thread the needle by offering a co-op option that partially satisfies House liberals while being disparate enough from the idea of a public option to satisfy the Senate moderates.

Ezra Klein: That's what Finance argues. But who knows? I think the public would be quite happy with a bill including a public option, and so too would most Democratic senators. If Conrad or Nelson vote against the final bill, but do not filibuster, that's fine.

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St. Mary's City, Md.: Although I have some issues with the plan before Congress, I'm irritated that opponents equate the public option with nationalized health care, like it's a small step to complete government ownership of all hospitals and medical practices. People keep playing the socialism card for anything that smacks of big government. Don't they understand that true socialism would mean no private enterprise at all, or don't they care?

Ezra Klein: They don't care. Or, more to the point, they do care, but they care about defeating this bill, not accurately describing its provisions.

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Worcester, Mass.: Have you heard anything about why the Democrats on the Senate finance committee are putting up with the gang of six "negotiations"? Have they made any noises about moving a bill through finance that is not a "compromise"?

Ezra Klein: Yeah. I'm hearing widespread Hill pessimism on the Gang of Six. Virtually no one expects it to produce something workable at this point. Everyone is getting ready for what you do after it falls apart.

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Laguna Beach, Calif.: Do you have any sense of whether the elevation of MedPAC to an executive agency, or creation of IMAC will succeed as part of health-care reform?

Ezra Klein: It's hard to say. Its natural constituencies haven't made it a big priority. If the Blue Dogs wanted that, and in return they would leave the public option alone, they would get it. So too for the Senate centrists. And that goes double for Republicans. But no one has made this their cause, even though it's actually the part of the plan most responsive to the concerns of deficit/entitlement hawks.

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Anon: Maybe I work for an unusual firm but no one here has any idea how much their health-care premiums are as no one show us. I think firms should give employees a total compensation list every year. I would put it on the W-2 forms so people can figure out how much they are paying for health care and also the true percentage of taxes they are paying (a lot lower then they think.) Granted there would be opposition as that would be viewed as the first step to taxing benefits but people should know what they are receiving.

Ezra Klein: I would put it on every single paycheck, just as taxes are. People really need to make the connection between wages and insurance costs.

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Oakland, Calif.: I have heard some pundits talk about the idea of granting health insurance companies the ability to compete over state lines. They claim that this would help to reduce cost and provide effective market competition for health insurance companies, therefore negating the need for a government option or any type of government involvement. They use car insurance as a model for this.

Is this a legitimate argument? What are the pros and cons of the idea, and could it potentially be effective?

Ezra Klein: There's no evidence of this. The regulations they're talking about are things that insurers are required to cover. Things like mammograms, or pregnancy, or colonoscopies. That does raise the cost of some insurance, but it also makes certain that the policies cover what needs to be covered. That's why those regulations exist, after all: to make sure people don't buy policies that they think will cover them only to find out that the fine print excludes needed services. As for the cost impact of allowing competition across state line, I'm very, very skeptical that it'll be significant.

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Ithaca, N.Y.: Thank you for your excellent work in your blog.

If health insurance reform passes WITHOUT a public option, what impact do you see this having on the democrats in the mid-term elections?

Ezra Klein: The public option part of it? Almost none. Maybe there will be some dispirited liberals, but I have trouble seeing it. Now, if health-care reform doesn't pass, Democrats are in real trouble.

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Columbus Ohio: The HELP committee has a health care bill -- a pretty good one, I understand. the House has a health care bill. So why do we need a bill from the financial committee that's bound to be weak and watered down and barely "reform"? Why can't they just take the HELP bill and the House bill and "merge" them?

Ezra Klein: The issue here is Senate jurisdiction. Finance has sole control over money and Medicaid/Medicare. That means that the HELP bill doesn't have any way to pay for itself, or the Medicaid expansion, or the Medicare reforms. It's wildly incomplete, in other words. And the Senate can't go to the House without those parts of the bill. Sadly, we need the Finance Committee, or some very clever parliamentary maneuver that gives us its policy pieces.

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Washington, D.C.: Would you agree that one of the political problems with health reform right now is that Democrats are acting defeatist and not playing as a team? When Bush was pushing the War in Iraq, you certainly didn't see the Kent Conrad's out there constantly saying "we don't have the votes" or countless representatives not willing to stand up for the bill in front of their constituents. It's amazing that the Democrats can't play as a team. On a related subject, do you really think, at the bottom of their hearts, Conrad and Lieberman care more about health care or being bipartisan dealmakers? Do we need to send them to therapy for wanting to be liked so much?

Ezra Klein: One thing about "we don't have the votes." It's often a way of saying "I don't want to vote for this." It's just phrased in the passive, or senatorial, voice.

That said, Iraq was, in certain ways, easier. it was more popular, for one thing. Opponents were more afraid. The president had a more credible threat to bypass the Congress and act on his own. When Bush tried Social Security privatization and immigration reform, he didn't have the votes, and he lost.

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Potomac, Md.: Look, you really shouldn't push something like health care until you get a bipartisan consensus, until you can get through a town hall without being screamed at. At this point we should increase the maximum amounts in health savings accounts, let people roll them into Roth IRAs upon retirement age, and wait 30 years until we see if this approach worked.

Ezra Klein: So wait 30 years until health care consumes a solid third of our GDP and don't pass anything until grassroots organizations promise to stop sending people to town halls. Got it. Have you run this plan by an uninsured person?

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Los Angeles: How was o ya Ezra??

Ezra Klein: Excellent, though inferior when compared to Komi. The individual bites were amazing, but the meal built in richness more than it built in flavor, satiety, or composition. I prefer Komi's approach, which gives you eventual release from small, savory bites.

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New York: Do you think that a climate change bill is DOA in the Senate in this Congress? Could you please spin the most optimistic scenario to getting to 60 votes (or 50, if you think you could reconciliation for some sort of carbon tax)? Given the response from Blue Dog Senators, and that the Democratic Senate advantage is unlikely to increase much in '10 or '12, it seems like it might take a scene out of The Day After Tomorrow to get this thing passed.

Ezra Klein: Sadly, I have no optimistic scenario, particularly after health care. It's very scary.

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Los Angeles: The CBO's initial scoring of the health care bill said that the cost of instituting the health care reforms would be a little over $1 trillion over 10 years. But, the CBO didn't really talk about the revenue raising mechanisms to cover that (deduction caps, high end marginal tax increase, etc.), did it? Newt said yesterday that the $1 trillion will go straight to the public debt. Are the critics being a little cute by saying that the cost will be $1 trillion but ignoring the revenues that will be raised to cover that cost?

Ezra Klein: I wouldn't call it "cute." I'd call it misleading. But yes. Republicans legislated without pay-go rules, and so they didn't pay for their spending, and the public got used to the idea that spending=debt. Democrats put pay-go back in place and are paying for their spending, but Republicans are simultaneously implying that they're not and attacking them on the deficit while also attacking them on the revenue raisers (taxes, Medicare reforms) that keep it deficit-neutral. It's really a neat trick.

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New York: Do you have an understanding as to when the various elements of health-care reform would actually go into effect?

Ezra Klein: Most would hit in 2013. A few of the insurance market reforms would begin sooner.

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Ezra Klein: There are about a thousand awesome questions left, but I have to run to a lunch. Thanks for participating, folks!

I am deeply curious about what these companies (or employing entities of any type) are that supposedly don't care what their health benefit costs are (and in the extreme version don't even know what they are). Every midsized company I have worked/consulted for in the last 20 years knows exactly what their costs are, shops them as hard as possible every term, and is very worried about their ability to pay or stay in business in the future. Can you point me to some employers who don't care what their health benefit costs are?

Ezra, that's terrible advice to give to a mid-30s couple from another country on where to live. CH, MtP, and Petworth are great for 20-somethings living in a group house. It's even pretty good if you've been in DC for a while and want to buy a house in a neighborhood you're familiar with and are willing to put up with the crime and occasional shooting. But Old Town Alexandria, Cleveland Park, and Clarendon are better places for 30-something professionals looking for a nice place in the metro area. Not everyone is in a "slumming it" or even a "gentrifier" stage in their lives.

I'm skeptical that the extrapolation of healthcare growth are going to hold true. As a matter of mathematical principal, I'm opposed to this sort of growth rate extrapolation, when the absolute growth is definitionally constrained from above.

For example, Moore's Law. It appeared to be an exponential growth curve for some time, but turned out to be a sigmoid, and this fact could be derived at the Law's inception.

I'm pretty certain healthcare costs will work the same way. What appears exponential, is really sigmoidal, or even gaussian.

If we don't do anything, some factor will intervene to hold down costs. Beyond that, a large portion of the increasing costs is probably just a consequence of aging demographics. When the baby boomers die, I expect that that will help hold down costs.

That said and despite my methodological nitpicking, I'm very much in favor of progressive healthcare reform. I just think we should be extra careful that are our arguments are of the highest quality, if only to stand in starker contrast to Republican Buffoonery.

http://www.aei.org/outlook/28443 (scroll down to Fig. 1, pulled from CBO)

And yeah, there's no way literally every dollar in our economy will be devoted to health care bey the end of the century, as projections currently show. But without reform that bends the cost curve in the ways that increase quality, the way that's likely to happen will be catastrophic -- increasing numbers of workers being dumped and priced out of the market, increasingly punitive deductibles that ratchet down needed and unneeded care, a flood of emergency-room only medicine, and an even more excplicitly tiered health care system.